Mozambique: Uneven Access a Challenge to Financial Inclusion Targets

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With only 24% of adults in urban areas with access to financial services, Mozambique lags behind its peers in financial inclusion. Perhaps unsurprisingly, the numbers are even lower with rural and female population. In July 2016, Mozambique introduced a new financial inclusion strategy designed to increase access to financial services from 24 percent to 60 percent of the population by 2022.

With the coastal African nation taking this important step toward reaching the unbanked, we released an update to the Mozambique interactive dashboard, a dynamic tool that explores access to finance through geospatial data. With help from FSD Mozambique, the dashboard uncovers opportunities to increase financial inclusion through detailed analysis and data visualization. From interacting with the data on access points, it becomes clear that there are a few barriers to financial inclusion in Mozambique that must be addressed if the country is to reach its ambitious goal.

For one, the country has what Cenfri termed a ‘citadel economy’, meaning huge disparities exist between people “inside and outside of the enclave”, or the main cities. Much of this inequity is due to physical infrastructure, which is concentrated in urban areas. For people living and working in rural areas, it is difficult to reach financial access points and also challenging for financial service providers (FSPs) to build and maintain locations in those areas. The walls of the citadel can be seen by examining access to finance across provinces; Maputo and Maputo Cidade are the only two provinces in which all districts have access points.

Indeed, as this example illustrates, expanding financial access will require investment in physical infrastructure. As is the case in other countries, FSPs depend greatly on roads, cellular towers and other infrastructure to provide services to populations outside of the main urban areas.

Secondly, 66 percent of the population transacts exclusively in cash. On the surface, this is not necessarily a hindrance to financial inclusion because even digital financial services offer cash-in and cash-out services through mobile money agents and ATMs. However, banking regulations that prohibit banks from charging fees for deposits or withdrawals have resulted in the “unintended consequence of dissuading banks from establishing encashment facilities and extending cash infrastructure” in areas where they are needed, including rural regions. This means that unbanked populations continue to rely heavily on cash transactions and are unable to take advantage of various financial services and products.

Even with these barriers, Mozambique has certainly made progress over the past year, increasing the total number of access points from 886 to 1,035. Yet, as mentioned previously, much of this increase is concentrated in urban areas and financial access points exist in fewer than 90 of the 152 districts in the country. While financial inclusion requires more than simply creating physical access points, the lack of these encashment facilities does seem to be the primary obstacle preventing Mozambique from reaching its goal.